Tuesday, 13 January 2009

UK external trade account worsens

The UK trade numbers illustrate the growing economic crisis. Both exports and imports are falling. However, exports are falling faster than imports.

The UK’s deficit on trade in goods and services was £4.5 billion in November, compared with the deficit of £3.9 billion in October. The trade account also deteriorated, rising to £8.3 billion, compared with of £7.6 billion in October

The lack of growth in exports is surprising, not least because sterling has fallen through the floor over the last 18 or so months. UK exports are now much cheaper, and in principle, we should have seen at least a limited pick up in export demand. For some reason, it simply hasn't happened.

Alice, in order for the UK to export it's way out there needs to be a market into which to export. There might be such a market later this year, but right now nothing is moving. I work in UK manufacturing, ironically I am "forecasting demand". It's never been easier, as the demand is zero. You can barely give product away, as there is so much stock.

Once that stock is cleared exporters can benefit, but until people start to buy, and stocks therefore clear, there's no need to export.